Dr. Harry Chen was named Vermont’s new secretary of the Agency of Human Resources on Tuesday by Gov. Peter Shumlin, left.

MONTPELIER — Human Services Secretary Doug Racine has been ousted by Gov. Peter Shumlin, who said he is seeking new leadership as challenges within the state’s largest agency continue to mount.

The move was announced Tuesday morning by the governor’s office, which said Health Commissioner Harry Chen will take over as interim secretary for the remainder of the year.

Chen, formerly of Mendon, was an emergency room doctor at Rutland Regional Medical Center for more than 20 years before becoming health commissioner in January 2011. He also served in the Vermont House from 2002 to 2008.

A search will be conducted for a permanent replacement at the massive, six-department Agency of Human Services. It’s unclear if Chen will be a candidate for the position.

In a press release announcing the personnel changes, Shumlin, a second-term Democrat, praised the work of Racine, a former political rival who narrowly lost to Shumlin in a crowded 2010 primary for the Democratic nomination for governor before being tapped in 2011 to run the agency.

“I appreciate Doug’s hard work over three and a half years to help Vermont’s most vulnerable,” Shumlin said.

But AHS has faced significant challenges, particularly in the last year.

Vermont Health Connect, the state’s online health insurance marketplace overseen by the agency’s Department of Vermont Health Access, has struggled and remains hobbled. Nearly a year after its launch the website lacks key technical functions that were promised.

And the Department for Children and Families, which is part of AHS, has faced scathing criticism following the deaths earlier this year of two children supervised by the department. Two-year-old Dezirae Sheldon of Poultney died in February and 15-month-old Peighton Geraw of Winooski died in April. Both deaths were ruled homicides.

Shumlin alluded to those challenges in his statememt.

“This has been a tough job, but now is the right time to start with new leadership to take the Agency of Human Services forward,” Shumlin said.

Shumlin took questions from reporters at a Tuesday afternoon news conference, but offered few details beyond the official statement. He declined to elaborate on the timing of Racine’s firing, which came after months of calls by Republicans for Racine and others within the agency to resign because of the exchange failures.

“These decisions are always difficult. Secretary Racine led the agency, as you know, for almost four years, and he did it with great distinction. He took on some real challenges, including, just to remind you, having to shut down the State Hospital in the middle of the night and rebuild our entire mental health delivery system,” Shumlin said.

“As governor, these decisions are never easy,” he said, “but I felt it was time for a different kind of leadership, and I’m grateful to Secretary Racine for his service.”

Racine, a former lieutenant governor and state senator, said Tuesday he is disappointed by the governor’s decision. He said he was summoned to a meeting with Administration Secretary Jeb Spaulding and Shumlin’s chief of staff, Elizabeth Miller, on Monday afternoon and told he was out. Shumlin did not attend.

“I was told that I was leaving. I did not ask (to leave),” Racine said. “I was not expecting this. It came as a surprise.”

Shumlin’s top aides said the governor “wanted to move in a new direction” with “a different style of leadership,” Racine said.

He said he was also told that Shumlin was happy with his efforts to rebuild the agency after years of budget cuts and was assured in recent weeks that he was not being held responsible for the agency’s struggles.

“The governor said to them that I had done what he asked me to do and he was satisfied with that work,” Racine said.

But the decision was already made, he said, and he was informed at the Monday meeting that Chen would take over. He opted to clean out his office that afternoon.

“I didn’t want to go back to the office and pretend that nothing had happened for a day,” Racine said. “I talked to the commissioners and staff. I took the pictures off the wall and personal things off the desk, packed them up and walked out the door.”

Racine said he isn’t sure what he will do next.

“I wasn’t planning on this. I was thinking I’d like to do this for another year or so, and then who knows, think about retirement,” he said. “I’m disappointed, frankly, that I can’t continue the work.”

He remains interested in the human services field as well as public policy. He has no plans to run for public office, but isn’t ruling it out.

“I enjoy the political arena too, even though it has its ups and downs,” Racine said. “This is one of the downs.”

For now, DCF Commissioner David Yacovone and DVHA Commissioner Mark Larson remain in place. But Shumlin said he has asked Chen to review operations and make any further recommendations necessary.

“I have confidence in all of my secretaries and all of my commissioners and all the people who work for state government,” Shumlin said. “I also have to, as governor, make the judgment when I think it’s time to stay the course — to stay the same — and when I think new leadership is necessary, and I’ve made that judgment. What I’ve asked incoming Secretary Chen to do is see what’s working well, what’s not working well, like I do with any secretary, and make recommendations.”

Chen also indicated he is willing to make additional changes in leadership if needed.

“My task is to go in with my leadership style, get to know the agency, the breadth of the agency, which has almost 4,000 employees, and see what’s working right, what’s not working right,” Chen said, “and certainly, if I feel there are ways in which leadership changes can be made to address those challenges, that’s obviously something I’m willing to do.”

Meanwhile, Yacovone said he has been told by administration officials that his job is secure.

“I’ve been reassured that it is, so I’m confident in that,” he said. “I have to take it at its word. I just have to focus on what’s needed to be done … whether it’s on firm ground or not.”

Yacovone called it a “pleasure and a privilege” to work with Racine.

“Without hesitation, without question, Doug always had our back — certainly mine,” he said. “But he also understood the issues. Doug is one of those people who sees the many shades of gray in policy issues. I can’t say enough about the support that he tried to give.”

Not all Republicans were cheering Racine’s departure. Sen. Kevin Mullin, R-Rutland, said he has “ a lot of respect” for Racine, and does not believe replacing Racine will expedite changes at AHS.

“I’m not sure his leaving is going to help improve the things that need fixing in the agency,” Mullin said.